Accessibility links

US Treasury Chief Forecasts Jail Time For Corporate Crooks - 2002-07-11


One day after President Bush called for a concerted crackdown on the accounting fraud that has wrecked some well known companies and pulled down U.S. equity prices, Treasury Secretary Paul O'Neill, himself a former corporate chief executive, said he expects wrongdoers will go to jail.

Mr. O'Neill told a business group that corporate crooks will be prosecuted and those who committed fraud will go to jail. He hailed President Bush's plan for tougher enforcement of existing laws and a doubling of jail time for those convicted.

"For me, the most important thing that is being done is to take away the ambiguity that some people apparently found in the existing regulatory process that caused some executives to believe that if something wasn't specifically prohibited, it was OK to do it," he said.

In recent months, accounting fraud has brought such corporate icons as Enron, Arthur Andersen and WorldCom to their knees. Thousands of their employees have lost their jobs and investments have been wiped out.

Larry Lindsey, President Bush's chief economic advisor, says a centerpiece of the new ethics campaign is the requirement that chief executives vouch for their companies' financial reports.

"What we're asking chief executives to do is to say not only do we have a check the box mentality with regard to standard accounting, but that what we're putting forward as the numbers for our company are a fair and accurate presentation of the true state of the company," he said. "That puts the CEOs reputation on the line. And I think that's important.

But not everyone is convinced that the government will succeed in cracking on corporate corruption. John LaFalce, the ranking democrat on the House Financial Services Committee, says President Bush has consistently opposed tougher regulation of business.

"When I wanted to have legislation requiring CEOs and chief financial officers to do what the president had called for, the certification of the financial statements for accuracy and reliability, the president didn't speak out and the Republicans voted no," he said.

President Bush now wants to increase the budget of the government financial market regulator in line with what Mr. LaFalce had called for.

Tough anti-fraud legislation is well on the way to enactment in Congress, but criminal prosecution of corporate executives accused of fraud is slow. Convictions, lawyers say, may be several months away.

XS
SM
MD
LG